It the latest setback for Big Tobacco, French insurer AXA (OTCQX:AXAHY) plans to stop investing in the industry, citing the impact of smoking on public health, and said it plans to sell its €1.8B of assets in the sector.

"With this divestment from tobacco, we are doing our share to support the efforts of governments around the world," incoming AXA Chief Executive Thomas Buberl said in a statement.

Ending his 16-year reign at the helm of the company, Axa (OTCQX:AXAHY) Chairman and Chief Executive Officer Henri de Castries is leaving earlier than expected, handing over the CEO post to AXA Germany head Thomas Buberl.

Deputy Chief Executive Denis Duverne will replace Castries as chairman after his retirement in September.

The move splits the top jobs at France's largest insurer and brings in fresh management to implement a new strategic plan.

Whoever invented the life insurance business model probably never figured on an extended period of barely visible interest rates.

“If interest rates stay low for another three or four years, all bets are off as to how many follow,” says one broker, as major insurers break a long-standing taboo of hiking rates on policies sold to clients many years ago.

The type of coverage at issue is universal life, which combines a death benefit with a tax-advantaged savings account, and since the 80s these policies have accounted for at least 25% of all new individual life insurance sales.

Annual rate increases range from about $150 for those with $250K in coverage, to six figures for coverage topping $10M.

Higher costs aren't the only issue - those tax-advantaged savings accounts aren't earning nearly as much interest as hoped.

Among those hiking rates are AXA (OTCQX:AXAHY) and Voya (NYSE:VOYA), though both say only a small percentage of accounts are affected.

Still waging the last war, the regulatory generals of Basel have completed drafting "the first-ever global insurance capital standard." Beginning in 2015, nine companies which have been decreed as systemically important by the FInancial Stability Board (this is different than the U.S.'s SIFI-designation), will report a "basic capital requirements" ratio on a confidential basis.

The next stage set for the end of 2015 is the definition of "higher loss absorbency" requirements.

France, on the other hand, is moved to overweight as a play on ECB launching QE. "Bond spreads are consistent with outperformance, and France stands to benefit more than Germany from any ECB easing," says Garthwaite.

P/E valuations are 5% below average, and 75% of the companies in CAC 40 have restructuring potential, he says.

80% of insurers say their businesses will have to change to produce adequate returns over the next three years, is one of the conclusions of a BlackRock study: Global Insurance: Investment strategy at an inflection point?

The low-yield environment has forced a majority of the industry to fine new fixed asset classes to invest in, and half to find new asset classes - like alternatives and derivatives - in which to put money. Along with those changes are greater risk management - 90% have increased investment in this area.

Samples: "Pre-2008 crisis, mortgage-backed securities, corporate credit structures and credit default options were a large part of the supply, and that’s no longer there ... the supply of fixed income is minimal whereas the demand is greater than ever on the part of institutional investors."

"The action of regulators, principally in Europe, has been to reduce the supply of capital available to provide ready markets to legitimate investors such as ourselves."

AIG (AIG), MetLife (MET) and Prudential Financial (PRU) are among nine global insurers that have been categorized as "systemically important" by the G20's Financial Stability Board. The designation, which U.S. authorities also want to place on the firms, will mean they'll have to hold higher capital reserves, and formulate recovery and resolution plans to limit any fallout should they collapse. Unlike in the U.S., GE Capital's (GE) not on the list, although Prudential PLC (PRU), Aviva (AV), Germany's Allianz (ALIZF.PK), France's Axa (AXAHY.PK), China's Ping An (PIAIF.PK) and Italy's Assicurazioni Generali (ARZGF.PK) are.

|Jul. 19, 2013, 2:59 AM|4 Comments

Jun. 9, 2013, 5:24 AM

Berkshire Hathaway (BRK.A) is reportedly interested in acquiring assets that Italian insurer Unipol (UGFNY.OB) must sell as part of a rescue of peer company Fondiaria-SAI. Berkshire faces competition for the assets, which have premiums of €1.7B, from Allianz (AZSEY.PK), Axa (AXAHY.PK) and Aviva (AV), among others. Non-binding offers are expected on Friday.

|Jun. 9, 2013, 5:24 AM

Apr. 3, 2013, 7:41 AM

HSBC (HBC) cuts more non-core assets, announcing the sale of its Singapore insurance business to AXA (AXAHY.PK) in a deal valued at about $19.3M. The move is a small part of a plan to save $3.5B in expenses and reduce headcount by 30K.

|Apr. 3, 2013, 7:41 AM

Mar. 27, 2013, 5:51 AM

Protective Life Insurance (PL) is reportedly in the lead to buy some of the U.S. life insurance assets of France's Axa (AXAHF.PK) in a transaction that could be worth $1B, or more than a third of Protective's market cap of $2.8B. A deal would help the firm expand beyond its main focus of variable annuity business, which is becoming harder to manage.

|Mar. 27, 2013, 5:51 AM

Dec. 6, 2012, 2:39 PM

Parts of Axa's (AXAHY.PK) U.S. life insurance business are reportedly on the block, including the remnants of Mony Group, which Axa acquired in 2004. Axa's focus of late is on faster-growing areas like Asia and emerging markets. The U.S. assets for sale may be worth at least $500M

|Dec. 6, 2012, 2:39 PM|1 Comment

Mar. 7, 2012, 2:45 AM

HSBC (HBC) agrees to sell its general insurance business to French insurer AXA and Australia's QBE Insurance Group for $914M in cash. The sale is part of HSBC's push to divest non-core assets, and helps AXA boost its presence in emerging markets.

AXA (AXAHY.PK) posts 2012 net income of €4.32B against €2.75B in 2011. The company didn't break out H2 numbers, but is calculated to have earned just €324M vs. €1.81B in 2011, hit by write-downs on its Greek paper. Believing itself to be in a good capital position, the company maintains its yearly dividend at €0.69. Shares -2.2% in Paris.